Is It Too Late to Buy Ulta Beauty Stock? The Motley Fool

Ulta is making gains but is falling short behind other makeup stocks. Estee Lauder (EL), had outperformed Ulta at the start of the pandemic and fiscal Q1 results beat Wall Street expectations. In a year when so many stocks have been dragged down by the bear market, it’s a pleasant surprise to find a business that has not only beaten the market but is actually up for the year.

The consensus among Wall Street analysts is that investors should “moderate buy” ULTA shares. Ulta Beauty is the largest beauty retailer in the United States, with a strong track record of growth and profitability. The company’s unique business model, which combines a broad assortment of products with a wide range of services, has been key to its success. So naturally, the potential for fusion markets forex broker review social media firms to earn money and expand their user bases is quite big in Asia. As a whole, the global social media market was worth $193 billion in 2022 and is expected to sit at $231 billion by the end of this year. From then until 2027, the sector is projected to grow at a compounded annual growth rate (CAGR) of 17.1% to be worth $434 billion by the end of the forecast period.

The monthly returns are then compounded to arrive at the annual return. Only Zacks Rank stocks included in Zacks hypothetical portfolios at the beginning of each month are included in the return calculations. Zacks Ranks stocks can, and often do, change throughout the month. Certain Zacks Rank stocks for which no month-end price was available, pricing information was not collected, or for certain other reasons have been excluded from these return calculations. While earnings are the driving metric behind stock prices, there wouldn’t be any earnings to calculate if there weren’t any sales to begin with.

Ulta Beauty’s (ULTA) Omnichannel Strength Aids, SG&A Costs Hurt

So, when comparing one stock to another in a different industry, it’s best make relative comparisons to that stock’s respective industry values. Cash is vital to a company in order to finance operations, invest in the business, pay expenses, etc. Since cash can’t be manipulated like earnings can, it’s a preferred metric for analysts. Note; companies will typically sell for more than their book value in much the same way that a company will sell at a multiple of its earnings.

  • I assumed that the company would grow its revenue at a compound annual growth rate (CAGR) of 5.7% between 2024 and 2030, based on their unique Loyalty program and expansion in stores.
  • Enterprise Value / Earnings Before Interest, Taxes, Depreciation and Amortization is a valuation metric used to measure a company’s value and is helpful in comparing one stock to another.
  • With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
  • That’s not a surprise given that the retailers each recently described worsening selling conditions as they reduced their 2023 outlooks.
  • Management mentioned price increases as boosting results this quarter, showing Ulta’s ability to pass price increases along to customers without hurting sales.

It sells Kylie Cosmetics from Kylie Jenner (of the Kardashian family) in-store. Jenner launched a new skincare line last year, which Ulta started carrying, as well as the famous lip kits and eyeshadow pallets. The relative strength line, which compares a stock’s price action with that of the S&P 500, crashed in August 2020 and is recovering again. Ulta said it raised its sales expectations for Q4 and now sees same-store sales falling 12% to 14%. However, it was unclear what the prior some-store sales outlook was. The fiscal fourth quarter is key for retailers amid the usually busy holiday shopping season.

EBITDA, as the acronym depicts, is earnings before interest, taxes, depreciation and amortization. That means these items are added back into the net income to produce this earnings number. Since there is a fair amount of discretion in what’s included and not included in the ‘ITDA’ portion of this calculation, it is considered a non-GAAP metric. The EV/EBITDA ratio is a valuation multiple and is often used in addition, or as an alternative, to the P/E ratio. And like the P/E ratio, a lower number is typically considered ‘better’ than a higher number. The Cash/Price ratio is calculated as cash and marketable securities per share divided by the stock price.

Short Interest

Ulta Beauty, Inc. operate specialty retail stores selling cosmetics, fragrance, haircare and skincare products, and related accessories and services in the United States. The company’s private label products comprises Ulta Beauty Collection branded cosmetics, skincare, and bath products, as well as Ulta Beauty branded products; and the Ulta Beauty branded gifts. It also distributes its products through its stores, website, and mobile applications. The company was incorporated in 1990 and is based in Bolingbrook, Illinois.

About MarketBeat

Investors have placed discounts on both Dollar General (DG 9.16%) and Ulta Beauty (ULTA -0.86%) stocks this year. That’s not a surprise given that the retailers each recently described worsening selling conditions as they reduced their 2023 outlooks. As how to trade forex for beginners and get a real profit a result, the two stocks have been left out of the rally in the S&P 500 this year. 2,453 employees have rated Ulta Beauty Chief Executive Officer Mary Dillon on Mary Dillon has an approval rating of 83% among the company’s employees.

Look closer and you’ll see more evidence that the beauty products retailer has the stronger demand posture. Its customer traffic rose by a blazing 11% in Q1, whereas Dollar General posted a small traffic decline. Ulta Beauty’s stock is owned by many different retail and institutional investors.

Is Ulta Beauty Stock a Buy?

The VGM score is based on the trading styles of Growth, VAlue, and Momentum. The Momentum Scorecard table also displays the values for its respective Industry along with the values and Momentum Score of its three closest peers. The Growth Scorecard table also displays the values for its respective Industry along with the values and Growth Score of its three closest peers. The Value Scorecard table also displays the values for its respective Industry along with the values and Value Score of its three closest peers. Researching stocks has never been so easy or insightful as with the ZER Analyst and Snapshot reports.

Heading into the first quarter of 2021, a total of 43 of the hedge funds tracked by Insider Monkey were long this stock, a change of 39% from the third quarter of 2020. On the other hand, there were a total of 41 hedge funds with a bullish position in ULTA a year ago. So, let’s review which hedge funds were among the top holders of the stock and which axitrader review hedge funds were making big moves. Another is the fact that operating income is likely to fall from 16.1% in 2022 to between 14.7% and 15% this year. Yet, Ulta is still on track to generate industry-thumping revenue and earnings growth in 2023. The company has one reportable segment, which includes retail stores, salon services, and e-commerce.

As the name suggests, it’s calculated as sales divided by assets. This is also commonly referred to as the Asset Utilization ratio. Cash flow itself is an important item on the income statement. While the one year change shows the current conditions, the longer look-back period shows how this metric has changed over time and helps put the current reading into proper perspective. Also, by looking at the rate of this item, rather than the actual dollar value, it makes for easier comparisons across the industry and peers.

Ulta Beauty’s ROCE for the same fiscal year was 44.42%, which is a very high ROCE and suggests that the company is generating a great return on its invested capital. Ulta Beauty was founded in 1990 and has since grown to become a major player in the beauty industry. The company’s success is due in part to its unique business model, which combines a broad assortment of products with a wide range of services. Ulta Beauty’s stores are typically large and well-lit, with a wide variety of beauty products on display. The company also offers a variety of salon services, such as haircuts, styling, and makeup applications.

I believe that this trend will continue in the coming years, given the satisfaction of existing customers and the continued growth of the beauty market. Ulta Beauty’s ROCE for the most recent fiscal year (2023) at 44.42% is significantly higher than the ROCE of its peers, such as Sephora (35.2%) and Estée Lauder (28.7%). This suggests that Ulta Beauty is generating a great return on its invested capital. Additionally, Ulta Beauty’s ROCE has been consistently high in recent years, increasing from 43.1% in fiscal year 2022 to 44.42% in fiscal year 2023. Ulta Beauty Inc. closed $177.17 below its 52-week high ($556.60), which the company reached on May 1st.

Shareholders in tobacco company Altria Group (MO 0.99%) recently got paid their quarterly dividend of $0.98 per share. Altria’s been putting money in investors’ pockets for decades, and the stock’s 9.2% yield is still impressive despite climbing Treasury bond yields. Earnings estimate revisions are the most important factor influencing stocks prices. It’s an integral part of the Zacks Rank and a critical part in effective stock evaluation. If a stock’s EPS consensus estimate is $1.10 now vs. $1.00 the week before, that will be reflected as a 10% change. If, on the other hand, it went from $1.00 to 90 cents, that would be a -10% change in the consensus estimate revision.

Leave a Reply

Your email address will not be published. Required fields are marked *